Steven A. Cook

From the Potomac to the Euphrates

Cook examines developments in the Middle East and their resonance in Washington.

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Wanting Egypt to Fail

by Steven A. Cook
January 28, 2013

An Egyptian Air Force F-16 fighter jet flies low over thousands of anti-government protesters gathered at Tahrir square in Cairo January 30, 2011. (Yannis Behrakis/Courtesy Reuters). An Egyptian Air Force F-16 fighter jet flies low over thousands of anti-government protesters gathered at Tahrir square in Cairo January 30, 2011. (Yannis Behrakis/Courtesy Reuters).

Egypt is a mess.  Just two short years after the uprising that brought Hosni Mubarak’s long-rule to an end, the country is paralyzed politically, protests have become increasingly violent, sectarian tensions are high, the public health system is in total disarray, and the economy is near collapse.  Nothing has gone right in this country of 84 million people that has traditionally been the most influential in the region—for good or bad—and since the mid-1970s a pillar of U.S.-Middle East policy.  It is not only the peace between Egypt and Israel, but also the U.S. Navy’s access to the Suez Canal, the many daily U.S. military overflights critical to the United States in confronting the Iranian threat, and Egypt’s logistical assistance for U.S. operations in Afghanistan and until not too long ago Iraq that are of paramount importance to Washington.  As a result, an objective observer might come to the reasonable conclusion that Egypt needs help and that the international community should do what it can to help pull Egyptians back from the brink.  That is certainly the view of most analysts from across the political spectrum, yet in one corner of the commentariat, they are actually hoping for Egypt to fail.

I recently came across a piece by David P. Goldman who pretentiously uses the pen name “Spengler” for Oswald Arnold Gottfried Spengler, an important early twentieth century German historian and philosopher, that paints a frightening picture of Egypt, its economy, and the Muslim Brotherhood.  Spengler/Goldman uses the recent revelation of President Mohammed Morsi’s anti-Semitism as his point of departure for a wild ride through his a-historic revisionism ranging from the claim that economic collapse was the reason for the uprising (a point made moot by his own argument that Egypt is now on the verge of economic collapse) to what the West should have done during those critical 18 days in early 2011. Here is a good example:

No nation the size of Egypt has become ungovernable except as a result of war during the whole modern period.  The deterioration of the Arab Spring into societal breakdown constitutes a reproach to the Western foreign policy establishment, which could not envision this outcome before, and refuses to consider its consequences now.

Spengler/Goldman’s reference to the “modern period” is supposed to give this analysis an air of heavy intellectual seriousness, but what we have here is nothing more than a crude lament that the United States did not give Hosni Mubarak a so-called “green light” to crackdown two years ago.  This is revealing for what Spengler/Goldman does not know about Egypt, its history, and the causes of Hosni Mubarak’s fall, but everyone is a Middle East expert these days. Even if President Obama had signaled that there would be no penalty for an Egyptian version of Tiananmen, it would not have been forthcoming.  Egypt’s officer’s would never have risked splitting the army’s loyalty, conscious that the captains, majors, and colonels on duty in Egypt’s streets beginning January 28, 2011 would not have obeyed the order to fire on fellow Egyptians.  Once more, the Supreme Council of the Armed Forces saw in the uprising an opportunity to rid themselves of Gamal Mubarak and his coterie who threatened their political and economic interests. Underlying Spengler/Goldman’s cry is, of course, an assumption that the United States could drive events in Egypt.  Even at moments when Egypt’s main political actors are not engaged in an existential struggle, Washington’s leverage is half-baked at best.

These details do not matter much because Spengler/Goldman is not actually interested in understanding Egypt.  No, this isn’t an intellectual enterprise: Spengler/Goldman is engaged in an ideological contest.  His target?  The Republican Party for not hanging Egypt on President Obama.

The discovery of Morsi’s apes-and-pigs comment might have provided a pretext for America’s Republican Party to wash their hands of the Egyptian president and shift the blame for the entire mess onto the Obama administration.  Such is the loyalty of the Republican mainstream to the so-called freedom agenda of the former Bush administration…

In Spengler/Goldman’s angry binary world, those natives clearly have no agency of their own.  It’s spineless American politicians who are to blame for Egypt’s imminent collapse.  In the end, Spengler/Goldman comes to the conclusion that Egypt will need $20 billion/year to stay afloat and since the United States and the West don’t have it and since Morsi is a crude anti-Semite, the international community should hasten an Egyptian calamity by withholding whatever aid is available.

Lest anyone believe Spengler/Goldman is an outlier, Shoshana Bryen from the Jewish Policy Center assails the Obama administration for not docking Egypt’s generous military aid and economic aid over Morsi’s anti-Semitism. She cites retired Brigadier General Safwat al Zayat—an ostensible interpreter of the politics of the Egyptian military, but who has been wrong so often that one wonders whether he is part of a military intelligence deception and denial campaign—claiming that the delivery of F-16s to Egypt was a signal from the Obama administration that it supports Morsi.  It was a signal, but rather to the military, which continues to work with Washington on its strategic concerns in the region.  The anti-Semitism of the Muslim Brotherhood is a problem and should be denounced as the Obama administration has, but to evoke a bygone era of which Bryen was no doubt a supporter, you have to deal with the Egypt you have, not the one you want.

Post a Comment 9 Comments

  • Posted by kzndr

    If you have the time/fortitude, a wade through Goldman’s oeuvre could make an interesting case study of the confluence of a number of bizarre trends on the right. I’ve read him for a while, mostly out of morbid curiosity, and he’s one part Daniel Pipes, one part Barry Rubin, one part Dinesh D’Souza, one part Allan Bloom, and one part Victor David Hanson. Egypt seems to be a particular pet project of his, and in both his blog and column in the Asia Times he has been predicting economic collapse and mass starvation in Europe (also: massive economic collapse in Turkey) for quite some time.

  • Posted by Peter C. McCall

    The process is messy, particularly when economic reality meets democratic principals, but the potential (with some economic help) is that the new politics can unleash a young and vibrant self governed people. We start where we stand, not where we would wish to stand.
    Peter C. McCall

  • Posted by Ming Tian

    After reading Mr. Cook’s confusing article, I read the Spengler/Goldman article for comparison.

    Comparing the two articles, the only conclusion I could come to is that Mr. Cook was trying to wipe lipstick off of Michelle Obama.

    The above statement makes no sense just like Mr. Cook’s attack on Goldman.

    If one is to be a hatchet man or Middle East analyst, he should at least present a viable argument.

  • Posted by Ge No

    Goldman never wanted Egypt to fail. He stated the collapse of Egyptian economy was inevitable, whether he wanted it or not. This is a big difference. Also, there is no revisionism there, he was making this prediction consistently over the last couple of years.

    Mr. Cook needs to be more attentive to his opponents’ opinions.

  • Posted by Balasticman

    Sadly, it is not only certain foreign commentators wanting Egypt to fail. The central strategy of much of Egypt’s opposition movement is premised on making real, and as quickly as possible, this same negative prophesy. And like with Mr. Goldman’s target, the goal of the NSF too is to serve narrow, short-term political interests, at whatever cost. http://balasticman.blogspot.it/2013/01/nsf-failing-to-save-nation.html

  • Posted by Desi Erasmus

    Yes, do read Goldman’s many columns on Egypt going back a couple of years, so you can see how mendacious a characterization of them Cook’s angry rant really is. Meanwhile, add a foreign policy that sends F-16′s and tanks to an anti-American totalitarian and unstable Egyptian regime and a domestic policy aimed at disarming ordinary citizens to your “Things that make you go hmmm” file.

  • Posted by Bob Van den Broeck

    Mr Goldman is a racist Jew. Unable to deal with the realities in the Middle east. 6.5 million Jews in Israel, surrounded by 1 billion + muslims. Do the math? The US is going even deeper into debt, and is now departing from economic world domination to a more militaristic approach. Threatening your mortgage holder(China), is a new tact that probably will not work for the USA. How many RADs can the messiah deal with?

  • Posted by pznr

    isn’t Goldman / Spengler the same Goldman who was Lyndon Larouche’s top aide and co-author of “The New Dark Ages Conspiracy” –which posited that nefarious Isis-cult conspiracy involving the Queen, the Beatles, Aldous Huxley and Theodor Adorno? If so, difficult to take him very seriously.

  • Posted by Anonymous

    lot of gaps between the time that one set of leaders transitions out and another transitions in. So we need to get moving quickly on this,” Obama said in announcing them.The addition of Hagel and Brennan, along with Democratic Senator John Kerry as nominee for secretary of state, rounds out Obama’s national security team as he faces daunting challenges of winding down the war in Afghanistan, dealing with the Iranian nuclear standoff and curbing military spending.Hagel, 66, appeared to face the tougher fight for confirmation in the Democratic-controlled Senate, in spite of Obama’s warm words of praise for the former Nebraska lawmaker as someone “who bears the scars and the shrapnel from the battles that he fought” in the Vietnam War.Some Democratic senators offered only tepid support for Hagel and many Republicans expressed deep concerns. The pro-Israel lobby in Washington, which Hagel once criticized, was gearing up to fight him.”Chuck Hagel, as a former colleague and a patriot with a decorated service record, has earned the right to nothing less than a full and fair process in the Senate. I look forward to fully studying his record and exploring his views,” Democratic Senator Charles Schumer of New York said.In an interview published as his nomination was being announced, Hagel told the Lincoln Journal Star, a Nebraska newspaper, that critics had “completely distorted” his record and said there was “not one shred of evidence that I’m anti-Israeli.”He expressed “unequivocal, total support for Israel” and backed tough sanctions against Iran over its nuclear program.Brennan, on the other hand, appeared to be generating less outright opposition, suggesting a possible easier path to confirmation. He withdrew his name from consideration for the top CIA post in 2008 in the face of criticism over comments suggesting the harsh interrogation methods produced useful information from detainees.There is no evidence Brennan was directly involved in the Bush-era program, which included techniques such as waterboarding, a form of simulated drowning, and sleep deprivation.As White House counterterrorism chief, he was a key player in the secret operation that led to the death of Osama bin Laden in 2011, and he has been at the heart of policies dealing with drone strikes in Yemen, among other issues.’ANOTHER POLITICAL FIGHT’Brennan, 57, would replace disgraced retired General David Petraeus, who got entangled in a sex scandal as CIA director and resigned in November after admitting to an affair with his biographer.”Clearly, Mr. Brennan has the qualifications and expertise to be the next CIA director,” said Democratic Senator Dianne Feinstein, chairwoman of the Senate Intelligence Committee, which will consider Brennan’s nomination. “He has longstanding knowledge of the operations of this critical agency and also the strength to see that it follows the law. I believe he will be a strong and positive director.”Obama’s decision to go ahead with the picks made clear he was ready to fight for his personnel and eager to put behind him a flap over his preferred choice for secretary of state, U.S. Ambassador to the United Nations Susan Rice. Rice pulled out of consideration in the face of criticism over her descriptions of the deadly attacks on the U.S. diplomatic mission in Benghazi, Libya.Mindful of the concerns about both Hagel and Brennan on Capitol Hill, Obama spoke at length about each in a White House ceremony, then turned over the microphone to outgoing Defense Secretary Leon Panetta and acting CIA Director Mike Morell to provide testimonials about their chosen replacements.Panetta, heading home after decades of public service, most recently as defense secretary and CIA director, expressed lighthearted exasperation with the partisan divide in Washington, saying he would go back to his California walnut farm where he would be “dealing with a different set of nuts.”While senators are normally inclined to give the benefit of the doubt to someone from their ranks, this has not been the case with Hagel, a maverick former senator.As Hagel’s name was floated for the post in recent weeks, many Republicans and some Democrats reacted with alarm, expressing deep concerns about past statements the moderate Republican has made. He has offered controversial views on key U.S. ally Israel, once complaining about the power of “the Jewish lobby” in Washington and urging direct talks with Iran over its nuclear ambitions.Past remarks seen as disparaging to gays have drawn the ire of gay rights groups. A group called the Log Cabin Republicans published a full-page ad in The Washington Post that attacked, for example, Hagel’s 1998 opposition to an “openly, aggressively gay man” to serve as a U.S. ambassador. He has since apologized for the statement.Republican Senator Rob Portman of Ohio said he was surprised and disappointed that Obama had moved ahead with the Hagel nomination.”I don’t understand why the administration is looking to pick yet another political fight instead of working with Congress to solve some of the very real problems we face as a country,” he said.(Additional reporting by Matt Spetalnick, Roberta Rampton, Mark Felsenthal and Patricia Zengerle; Editing by Warren Strobel and Eric Beech)Obama picks Yellen for top Fed job, urges quick Senate approvalWASHINGTON (Reuters) – President Barack Obama nominated Federal Reserve Vice Chair Janet Yellen on Wednesday to run the world’s most influential central bank, praising her consensus-building skills and saying more needed to be done to boost U.S. employment.Yellen, an advocate for aggressive action to stimulate economic growth through low interest rates and large-scale bond purchases, would replace Fed Chairman Ben Bernanke, whose second term ends on January 31.The nomination will put Yellen on course to be the first woman to lead the institution and the first to head a central bank in any Group of Seven industrial nation.”Janet is exceptionally well qualified for this role,” Obama said at a White House ceremony, with a beaming Yellen standing by his side. “She doesn’t have a crystal ball, but what she does have is a keen understanding about how markets and the economy work, not just in theory but also in the real world. And she calls it like she sees it.”If confirmed by the U.S. Senate, which is expected to endorse her despite some Republican opposition, Yellen would provide continuity with the policies the Bernanke-led Fed has pursued. She would likely move cautiously in reining in monetary stimulus put in place to shore up the world’s largest economy.Yellen, who spoke briefly after Obama, said she would promote maximum employment, stable prices, and a sound financial system. She said there was more to do to ensure people who were out of work could find jobs.”While we have made progress, we have farther to go. The mandate of the Federal Reserve is to serve all the American people, and too many Americans still can’t find a job and worry how they’ll pay their bills and provide for their families,” Yellen said.”The Federal Reserve can help if it does its job effectively.”While she spoke, the president stood close by her side, looking at her attentively. When she was done, he clasped her hand warmly and put his hand on her shoulder, applauding as they left the room together with Bernanke.Some analysts said Yellen’s likely policy approach should be supportive for stock markets that have come to rely on easy money from the Fed, but the market reaction on Wednesday did not provide a clear read on investor sentiment.Stocks closed modestly higher, lifted in part by rising hopes Congress could break a political impasse that has led to a partial government shutdown and that now threatens a possible default. The U.S. Treasury has warned it could quickly run out of cash to pay the nation’s bills if lawmakers do not raise the government’s $16.7 trillion debt ceiling soon.STRONG BACKING IN THE SENATEObama settled on Yellen, 67, after his former economic adviser Lawrence Summers withdrew from consideration in the face of fierce opposition from within the president’s own Democratic Party, raising questions about his chances of congressional confirmation.With markets jittery about a potential U.S. default, Obama appeared to want to provide reassurance with his announcement of Yellen. He noted her ability to reach consensus with colleagues – something Summers’ opponents say he lacked – and her success at predicting the risks of a major recession before it happened.”Given the urgent economic challenges facing our nation, I urge the Senate to confirm Janet without delay,” Obama said. “I am absolutely confident that she will be an exceptional chair of the Federal Reserve.”Yellen is expected to get strong backing in the Senate, especially from her fellow Democrats, though some Republicans have raised concerns.Yellen made clear she would focus squarely on continuing the Fed’s efforts to strengthen the economic recovery and to boost employment – points that could rub some Republican lawmakers, who think the Fed has pumped too much money into the economy, the wrong way.”Ms. Yellen subscribes to the liberal school of thought that the best way to handle our nation’s fiscal challenges is to throw more money at them,” said Senator John Cornyn of Texas, the body’s No. 2 Republican.Yellen also nodded to the importance of the Fed’s other job – keeping inflation in check.She is expected to gain enough support to secure the 60 votes needed to overcome any procedural hurdles in the 100-seat Senate. Democrats control the chamber 54-46.”Janet is exceptionally well qualified for the position, with stellar academic credentials and a strong record as a leader and a policymaker,” Bernanke said in a statement.(Additional reporting by Steve Holland, Alister Bull, and Roberta Rampton; Editing by Grant McCool and Tim Dobbyn)Obama says he will not negotiate with Congress on debt ceilingWASHINGTON (Reuters) – President Barack Obama warned Republicans in Congress on Monday that he will not negotiate over an extension of the U.S. debt ceiling as part of a budget battle that will soon dominate Washington, with a deadline fast approaching.Pivoting to domestic policy after devoting weeks to the crisis in Syria, Obama scolded his political opponents for threatening a federal government shutdown and attempting to attach conditions to funding the budget for the 2014 fiscal year that begins October 1.”Let’s stop the threats. Let’s stop the political posturing. Let’s keep our government open. Let’s pay our bills on time. Let’s pass a budget,” Obama said.In a speech marking five years of the start of the financial crisis that sent Wall Street teetering, the U.S. banking system to the brink of collapse and the economy into recession, Obama said much progress had been made in rebuilding the economy but much more remains to be done.He faces yet another budget showdown as Republicans in Congress attempt to force more spending cuts and remove funding for Obama’s signature achievement, the 2010 healthcare law that is facing a rocky rollout.The fight threatens to become a replay of a 2011 budget showdown that barely headed off what would have been a historic default on the U.S. debt over Republicans’ refusal to raise the debt limit.Obama spoke on the day that a gunman killed 12 people at Washington’s Navy Yard before being killed himself.”It’s a shame that the president could not manage to rise above partisanship today,” said the top Republican in Washington, John Boehner, speaker of the House of Representatives. “Instead, he should be working in a bipartisan way to address America’s spending problem, the way president of both parties have done before.”The U.S. Treasury is expected to exhaust measures to avoid exceeding the $16.7 trillion debt limit as soon as mid-October. If the cap is not raised, the United States will not be able to pay all of its bills and would go into default.Obama said “the last time the same crew threatened this course of action,” the mere talk of a debt default sent the stock market into a months-long tailspin and slowed U.S. economic growth.”I will not negotiate over whether or not America keeps its word and meets its obligations. I will not negotiate over the full faith and credit of the United States,” he said.”This country has worked too hard for too long to dig out of a crisis just to see their elected representatives here in Washington purposely cause another crisis,” he said.A Republican plan aimed at averting a government shutdown on October 1 ran into a wall of opposition last week from conservatives in the House, and leaders delayed votes on it until this week.The plan, derided as a “trick” by some conservatives, would have let them cast an essentially symbolic vote to defund the healthcare law without risking a shutdown, which is feared by party leaders who remember the political damage they suffered when government offices closed their doors in the mid-1990s.Under the plan, Republican leaders were prepared to extend funding through mid-December at an annualized $988 billion, the same amount as 2013 after reductions went into effect under the across-the-board cuts called sequestration. The White House signaled last week it could live with a short-term extension at that level, even though the president wants to reverse the sequester cuts.But some Democrats have said they want higher spending and would oppose a stopgap funding bill at the post-sequester amount.Obama said the Republican argument for spending cuts is belied by the fact that U.S. deficits are falling at the fastest rate since World War Two.(Additional reporting by Jeff Mason; Editing by Christopher Wilson and Philip Barbara)Obama says Republicans must end ‘threats’ on fiscal impasseWASHINGTON (Reuters) – President Barack Obama refused to give ground in a fiscal confrontation with Republicans on Tuesday, saying he would negotiate on budget issues only if they agree to re-open the federal government and raise the debt limit with no conditions.At a news conference, an unbending Obama said he would not hold talks on ways to end the fiscal impasse while under threat from conservative Republicans, but agreed to discuss anything, including his healthcare plan, if they restore government funding and raise the debt limit.”If reasonable Republicans want to talk about these things again, I’m ready to head up to the Hill and try,” Obama told reporters.”But I’m not gonna do it until the more extreme parts of the Republican Party stop forcing (House Speaker) John Boehner to issue threats about our economy. We can’t make extortion routine as part of our democracy.”Obama’s comments followed an earlier phone call to Boehner, who had adopted a slightly more conciliatory tone in comments to reporters after a meeting with House of Representatives’ Republicans.Boehner had said there were “no boundaries” in potential talks, and made no mention of recent Republican demands to delay parts of Obama’s healthcare law in return for approving funds to end the government shutdown.But speaking to reporters after Obama’s news conference, Boehner said he was “disappointed” by the president’s approach.”What the president said today was ‘if there is unconditional surrender by Republicans, he’ll sit down and talk to us.’ That’s not the way our government works,” Boehner said.The public give-and-take between Obama and Boehner was the most direct exchange between the two leaders since a White House meeting last week, but neither side has come up with a path to resolving the bitter fiscal stalemate.The spending and budget impasse has shut down the federal government for eight days and threatens to prevent the raising of the country’s $16.7 trillion borrowing limit before an October 17 deadline identified by Treasury Secretary Jack Lew.Investors are exhibiting increasing anxiety as the deadline for raising the debt ceiling approaches.Interest rates on one-month U.S. government debt hit a 5-year peak on Tuesday and the Standard & Poor’s 500 stock index closed down 1.23 percent.”Until you see some progress, things will likely get worse,” said Eric Green, global head of rates, currency and commodity research and strategy at TD Securities in New York.On Tuesday, House Republicans proposed the creation of a bipartisan committee to work on the issue, which was rejected by Democrats. Senate Democrats also introduced a bill to raise the debt ceiling with no conditions through 2014, but included none of the deficit reductions that Republicans have demanded.House Republicans emerged from a morning meeting saying they would insist on deficit-reduction talks with Obama as a condition for raising the federal debt limit, but some signaled they might pass short-term legislation to avert a default in exchange for immediate talks.”If we have a negotiation and a framework set up, we can probably reach a way to raise the debt ceiling while the negotiation is in progress. But nobody is going to raise it before there is a negotiation,” Republican Representative Tom Cole of Oklahoma said.’A RECESSION OR WORSE’The impasse sparked a rising tide of warnings about the potential global economic chaos of a U.S. default, with foreign creditors and the International Monetary Fund’s chief economist warning of the potential consequences.”I think what could be said is if there was a problem lifting the debt ceiling, it could well be that what is now a recovery would turn into a recession or even worse,” IMF chief economist Olivier Blanchard said.Japan’s finance minister said a failure by the United States to quickly resolve its political deadlock over government finances could damage the global economy.”The U.S. must avoid a situation where it cannot pay (for its debt) and its triple-A ranking plunges all of a sudden,” Japanese Finance Minister Taro Aso told reporters after a cabinet meeting.”The U.S. must be fully aware that if that happens, the U.S. would fall into fiscal crisis,” he said in the latest sign that Japan and China, the biggest foreign creditors to the United States, are worried the impasse could harm their trillions of dollars of investments in U.S. Treasury bonds.Obama said he did not think the crisis would create lasting international damage, saying “folks around the world will attribute this to the usual messy process of American democracy.”The U.S. Chamber of Commerce, a traditional supporter of pro-business Republicans, also warned about further delays in reopening the federal government and raising the debt limit.”The debt ceiling specifically must pass on a timely basis to avoid inflicting substantial and enduring damage on the U.S. economy,” said Bruce Josten, the group’s executive vice president.Polls show growing public concern over the impasse, with Republicans getting slightly more of the blame.A Reuters/Ipsos poll on Tuesday found the percentage of Americans concerned about the shutdown rose to 75 percent from 66 percent last week. Blame for Republicans grew to 30 percent from 26 percent, with the level of blame for Obama and Democrats at 19 percent, up from 18 percent.Plenty of obstacles remain to settling the issue. In the Senate, Democrats introduced a bill on Tuesday to raise the government’s borrowing authority by enough to last through 2014.A Democratic aide said they were hopeful they could get the 60 votes needed to overcome procedural hurdles in the 100-member Senate and pass the debt ceiling bill with no strings attached, even though the measure includes no deficit reduction.But Republican Senator John McCain, who some Democrats had hoped might support getting the “clean” debt ceiling bill to a vote, declined to back it when asked by reporters. “The answer to this is negotiations,” said McCain from Arizona.In the House, Republican leaders unveiled a proposal for a 20-member committee to make recommendations on a debt limit increase and look at ways to rein in the country’s deficits, but Democrats quickly rejected the idea.Under the legislation, the Republican House would name 10 members to the panel while the Democratic-led Senate would name the other 10. The panel would also make recommendations on a measure to fund the government for the 2014 fiscal year, ending the shutdown.The plan is reminiscent of a failed 2011 “supercommittee” of Republicans and Democrats from the House and Senate that was asked to find trillions of new budget savings.The White House said Obama would veto a bill for the new deficit-reduction panel if it reached his desk as it did nothing to solve the immediate obligation for Congress to open the government and pay its bills.The special committee measure passed the House in a 224-197 vote on Tuesday evening with the support of just two Democrats and opposed by five Republicans. It seemed unlikely to be taken up in the Senate.Despite widespread warnings about failing to raise the debt limit, some House Republicans dismissed the prospect of a first-ever default.”There’s no way to default. There is enough money coming into the Treasury to pay interest and roll over principal,” said Representative Justin Amash of Michigan, a favorite of the smaller-government Tea Party wing of the Republican Party.Asked about warnings of catastrophic consequences if the debt limit is not increased, Amash told reporters: “I say it’s patently not true what they are saying.”(Additional reporting by David Lawder, Richard Cowan, Caren Bohan, Jeff Mason, Matt Spetalnick and Mark Felsenthal; Writing by John Whitesides; Editing by Tim Dobbyn)Obama says U.S. to keep ‘going after’ al Qaeda-linked groups in AfricaWASHINGTON (Reuters) – President Barack Obama on Tuesday staunchly defended his decision to order commando raids in Libya and Somalia last weekend, saying the United States would keep targeting al Qaeda-linked groups in Africa but had no intention of going to war there.Speaking at a news conference, Obama said the United States was justified in seizing a senior al Qaeda figure in Tripoli and whisking him out of the country, and he made clear that it likely would not be the last operation of its kind.”Where you’ve got active plots and active networks, we’re going to go after them,” Obama said. “We’re not going to farm out our defense.”Nazih al-Ragye, better known by the cover name Abu Anas al-Liby, is being held aboard a U.S. Navy ship in the Mediterranean Sea where he was questioned by an elite American interrogation team.Three Republican U.S. senators said on Tuesday that Liby – a suspect in the 1998 bombings of U.S. embassies in Kenya and Tanzania that killed 224 civilians – should be brought to the U.S. detention center at Guantanamo Bay, Cuba. But the Obama administration was not likely to transfer him there.One U.S. official said Liby might face prosecution in a federal court in New York, where he is under criminal indictment.Obama said Liby had killed “a whole lot of Americans” and that the U.S. government had strong evidence against him and he would be “brought to justice.” But he offered no details on how the case would be handled.The capture of Liby and a failed attempt by U.S. commandos to capture an Islamist militant in Somalia offered evidence the United States was willing to use ground troops to seize wanted militants in unstable African countries where they operate.But analysts said it was too early to tell whether such operations might eventually mean a diminished focus on the armed drone strikes central to Obama’s counterterrorism policy in places like Afghanistan, Pakistan and Yemen.In a speech in May, Obama said he wanted to pull the United States back from some of the most controversial aspects of the global fight against Islamist militants as U.S. forces gradually withdrew after more than a decade of war in Afghanistan.But he made clear on Tuesday that U.S. forces would keep up targeted strikes in Africa against al Qaeda affiliates and allies that may not be able to attack beyond their borders but “can do a lot of damage inside their borders.”In cases where local governments lack the capacity to fight these groups, he said, “We’re going to have to continue to go after them.”Libyan Prime Minister Ali Zeidan said earlier on Tuesday that Libyans accused of crimes should be tried at home, but that the raid would not harm ties with Washington.REPUBLICANS PUSH FOR GUANTANAMO DETENTIONU.S. Senators Lindsey Graham, Kelly Ayotte and Saxby Chambliss said they hoped to urge Obama, via a congressional resolution or an amendment to an upcoming defense authorization bill, to adopt a policy for long-term detention and interrogation of terrorism suspects.At a news conference, the Republican senators praised Obama for seizing Liby, now being held aboard the USS San Antonio, an amphibious transport dock ship.But they disagreed with what they said was the administration’s decision to keep him on a ship to be interrogated for 60 days, adding that was not long enough to gather information.”Putting him on a Navy vessel for a matter of days or weeks is not a proper way to gather intelligence in the war on terror. This system of using Navy warships in lieu of Gitmo compromises our ability to gather intelligence,” said Graham, a senior member of the Senate Armed Services Committee.The call to bring Liby to Guantanamo comes as Obama pushes to close the detention center, where hundreds of suspects have been held for years without trial.Concerned about the circumstances of his capture, New York-based Human Rights Watch urged the United States to ensure Liby was “promptly charged before a judge and given access to a lawyer in accordance with international human rights law.”The capture in Tripoli came the same weekend that a Navy SEAL team swooped into Somalia in an operation targeting a senior al Shabaab figure known as Ikrima, described by U.S. officials as a foreign commander for the organization.Obama, who ordered the SEAL raid that killed Osama bin Laden in Pakistan in 2011, approved both operations, but the White House said the timing was “coincidental.”The Somalia raid was designed to capture Ikrima, but the SEAL team broke off the mission when it became apparent that capturing him would not be feasible without a heavy risk of civilian casualties and to the SEAL team itself, officials said.”The fact is it was a failure,” said Republican Senator John McCain, a frequent critic of Obama’s national security policy. “The fact is that there was an intelligence failure there. Otherwise the mission would have been completed.”Ikrima, whose real name is Abdikadar Mohamed Abdikadar, was linked with now-dead al Qaeda operatives Harun Fazul and Saleh Nabhan, who had roles in the 1998 embassy bombing in Nairobi and in the 2002 attacks on a hotel and airline in Mombasa, Kenya, U.S. officials said.(Additional reporting by Roberta Rampton and Jeff Mason; Editing by Peter Cooney)Obama says willing to talk to Republicans, but not under duressWASHINGTON (Reuters) – President Barack Obama warned on Tuesday that a U.S. debt default could wreak havoc and he would talk to congressional Republicans about any topic but urged them to raise the debt limit without conditions.Obama said he told House Speaker John Boehner in a phone call that he would not hold talks under the threat of a debt default or of keeping the government shut.(Reporting By Mark Felsenthal; Editing by Sandra Maler)Obama seeks immediate fix to stalled military death benefitsWASHINGTON (Reuters) – President Barack Obama directed government lawyers to find an immediate fix for stalled aid for the families of soldiers killed in the line of duty during the government shutdown, White House spokesman Jay Carney told reporters on Wednesday.Obama signed a law just before the shutdown allowing the Pentagon to pay the military, but lawyers said the bill did not permit the government to pay a $100,000 tax-free payment to families of fallen troops during the impasse.At least five families of soldiers killed last weekend in Afghanistan were affected by the suspension, U.S. Senator John McCain said. The Republican lawmaker said on Tuesday that members of Congress should be “embarrassed” and “ashamed” for the lapse.Obama was “very disturbed” when he heard about the lapse, and directed lawyers at the Defense Department and White House budget office to find a way to resume the payments, Carney told reporters.”The president expects this to be fixed today,” Carney said.He said the Pentagon told Congress that it would be “legally unable” to pay death benefits in the event of a shutdown, but that the issue “was not explicitly addressed” in the law that allows the military to continue to be paid.(Reporting by Mark Felsenthal and Roberta Rampton; Editing by Christopher Wilson and Eric Beech)Obama seeks to ease doubts on global leadershipUNITED NATIONS (Reuters) – President Barack Obama sought to ease doubts about his leadership on the world stage on Wednesday as he confronted a looming diplomatic crisis in the Middle East and hailed popular Arab revolts.Obama attempted to reassert his credentials as a world statesman in an address inside the cavernous U.N. General Assembly hall even as he grappled with high unemployment and low poll numbers at home that threaten his re-election bid.His high-profile foray into foreign policy challenges was dominated by efforts to head off a Palestinian plan to seek U.N. recognition of statehood, a move that could erode U.S. global standing and further isolate close ally Israel.Obama’s last-ditch diplomatic drive won praise from Israel, which will rely on Washington to block the Palestinian U.N. membership bid in the Security Council, but the Palestinians vowed they would not be deterred.The president — whose earlier peace efforts accomplished little — insisted that Middle East peace “will not come through statements and resolutions” at the world body and put the onus on the two sides to break a yearlong impasse and return to peace talks.”There is no short cut to the end of a conflict that has endured for decades,” Obama told an annual gathering of world leaders in New York, though he offered no new prescriptions for relaunching negotiations.Obama finds himself in the quandary of opposing a move toward Palestinian self-determination even as he hailed Arab democracy movements that have shaken — or toppled — authoritarian rulers in Tunisia, Egypt, Syria and Libya.A senior Palestinian official said Obama’s stance violated the spirit of the “Arab spring,” and it seemed the best the president could hope for was to slow down the Palestinian statehood bid or contain the diplomatic damage it causes.This comes as Obama’s outreach to the Muslim world has already been faltering and further underscores the stark new limits of U.S. influence amid Middle East upheaval.Obama attempted to strike a delicate balance from the U.N. podium. He sought to reassure Palestinians he was not abandoning his pledge to help them end Israeli occupation and achieve eventual statehood while also placating any Israeli concerns about Washington’s commitment to their security.He was considered unlikely to lean too heavily on Israeli Prime Minister Benjamin Netanyahu for concessions to the Palestinians, mindful that he cannot afford to alienate Israel’s broad base of support among American voters as he seeks re-election in 2012.REPUBLICAN CRITICISMIleana Ros-Lehtinen, Republican head of the House of Representatives’ Foreign Affairs Committee, said Obama was “slow to respond to the dangerous Palestinian statehood scheme” and that he did take a strong enough stand in favor of Israel.Members of the General Assembly, where pro-Palestinian sentiment is high and Israel has often felt ostracized, listened politely but without enthusiasm to Obama’s speech.Even as the looming U.N. showdown overshadowed Obama’s agenda, he sought to rally fellow leaders for concerted action to spur the sagging global economy. He also kept pressure on the Europeans over the euro zone debt crisis.Obama held a marathon round of bilateral talks with new Japanese Prime Minister Yoshihiko Noda, British Prime Minister David Cameron and French President Nicolas Sarkozy.”We stand with our European allies as they reshape their institutions and address their own fiscal challenge,” Obama said in his speech.For their part, other leaders are concerned about political dysfunction in Washington underscored by a bipartisan brawl over debt and deficits that led to a downgrade of America’s top-notch credit rating.Obama’s vision of multilateral diplomacy helped him earn a Nobel Peace Prize after only 11 months in office and made him wildly popular in Europe and elsewhere. He promised a dramatic shift from what was widely perceived as the go-it-alone “cowboy diplomacy” of predecessor George W. Bush.While many world leaders have welcomed the change in U.S. tone, the euphoria over Obama’s collaborative approach has worn off, and questions about global economic concerns have overshadowed “soft power” issues he previously espoused.Obama’s annual turn at the U.N. podium came at a time when he is increasingly preoccupied with Americans’ domestic concerns — a stagnant economy and high unemployment — considered critical to his 2012 re-election chances.Foreign policy has slipped down his policy agenda, a trend not lost on fellow world leaders trying to fathom how much of a role Obama intends to play in world affairs.A key example was Obama’s decision to keep U.S. forces mostly in a support role in the NATO bombing campaign that helped oust Muammar Gaddafi.Obama has drawn criticism for what has been seen as a slow and uneven response to the “Arab spring” revolts engulfing friends and foes alike, and Republicans say his “leading from behind” approach undermines U.S. global prestige.Obama also used his speech to laud the U.S. killing of Osama bin Laden, urge further sanctions against Syrian leader Bashar al-Assad and tout his efforts to wind down wars in Iraq and Afghanistan. He also called on Iran and North Korea to meet their nuclear obligations — twin standoffs that have eluded his efforts at resolution.(Additional reporting by Arshad Mohammed, Andrew Quinn, Lou Charbonneau, Alistair Lyon; Editing by Doina Chiacu and Todd Eastham)Obama tax blueprint opening gambit in potential tax rewriteWASHINGTON (Reuters) – President Barack Obama on Wednesday revived a list of his favorite tax ideas, hoping to raise $580 billion in new revenues from the wealthy over a decade in a potential opening gambit to forge a deal with Congress to overhaul the tax code.While certain not to move forward en masse, his 2014 budget blueprint has elements likely to spur discussion, including a proposal to tax derivatives more stringently, as lawmakers weigh a tax code revamp and face a deadline on the government’s debt limit this summer.”These are all opening bids in any potential grand bargain, so from that perspective they are important,” said Chris Krueger, an analyst at Guggenheim Partners.Congressional Republicans largely blasted the Democratic president’s budget proposal, highlighting the difficulty policymakers have had forging a long-term deficit-cutting plan.Obama’s budget does not seek to raise individual tax rates as he has proposed in prior budgets. For years, he sought to raise rates on household income above $250,000.Obama and most Republicans agreed during last year’s fiscal cliff battle to raise rates for households earning more than $450,000 a year, to 39.6 percent from 35 percent.A senior administration official said on Wednesday the White House preferred not to “re-litigate” that fight.Obama’s budget also proposes a new “Buffett tax,” a minimum tax rate for the wealthy, named for investor Warren Buffett, that phases in a minimum 30 percent tax rate on household income above $1 million.The bid revives Obama’s offer last year to Republican House of Representatives Speaker John Boehner during the talks to avoid the so-called fiscal cliff of looming tax hikes.The budget also reprised a proposal to cap tax breaks among wealthier taxpayers, starting at household income of roughly $250,000, limiting the value of deductions and loopholes in determining taxable income. A phased-in limit on deductions is now part of the tax code for more affluent taxpayers.The new cap would apply to the same list of breaks proposed in years past, including the charitable tax break and the exemption for municipal bond interest.Boehner last year said he could back raising new revenue through curbing deductions, though he now rules out new revenue.One battle Obama proposed to fight again is over the estate tax, pitching to raise it to 45 percent for estates worth over $3.5 million, after a deal to cap it in January at 40 percent for estates over $5 million.The budget also ends a tax break for “carried interest” profits earned by fund managers like those who run private equity and other investment firms, officials said.In a bid to attract Republicans, Obama proposed changing the inflation calculation for Social Security benefits to help shore up the finances of the public pension program, which would raise revenue and curb benefits.That proposal also would push people more quickly into higher tax categories, as their income rises faster than the brackets are adjusted.CORPORATE BREAKS A TARGETTop tax-writers in Congress are working on a tax rewrite, but the process is fraught with disagreement over details and whether to raise new revenue in the process.Prominent in the budget are proposals to raise hundreds of billions of dollars from U.S. multinational corporations that avert tax on income held overseas. Obama seeks to raise about $157 billion over a decade with these measures.These include limiting the ability of corporations to defer tax on foreign income and tightening foreign tax credit rules.Obama also sought more revenue by curbing energy tax breaks, and proposed an end to a tax advantage for corporate jets.”It doesn’t mean the administration is not open to a deal,” said Michael Mundaca, Obama’s top tax official in the Treasury Department during his first term and now co-director of national tax at Ernst & Young. “It is just that they may not be going to negotiate through the budget.”There were a few areas of potential agreement with Republicans. Obama pitched changing the taxation of derivatives to mark them to a market price yearly for taxation purposes, which he says will raise $19 billion over a decade.That proposal largely mirrors one put forward by House Ways and Means Committee Chairman Dave Camp. But that idea is part of a plan to drastically cut individual tax rates, which most Democrats have not signed onto.Another area that suggested compromise to some was Obama’s call for “revenue-neutral” business tax reform, something he had been unclear on in the past.”If he had taken a lot of corporate expenditures and used that for deficit reduction, that would really spell doom for tax reform,” said Gabe Horwitz, director of the economic program at the Democratic centrist group Third Way.The cuts to corporate breaks are counterbalanced by proposals to double a tax credit for small start-up companies and extend a business research and development tax credit. Obama also wants to expand a child care tax credit.The president has backed cutting the top U.S. corporate tax rate to 28 percent from 35 percent, now the highest in the industrialized world. But most companies do not pay the top rate after taking advantage of numerous tax breaks.(Editing by Kevin Drawbaugh, Howard Goller, Tim Dobbyn and Todd Eastham)Obama tax ideas face long odds ahead of electionWASHINGTON (Reuters) – President Barack Obama’s bid to get millionaires and multinational companies to pay more taxes may play well with many voters but it faces long odds in the deadlocked U.S. Congress.Obama used his State of the Union speech on Tuesday to press the case for a new minimum 30 percent tax on Americans earning more than $1 million a year and for tougher treatment of corporations that move jobs out of the United States.At the same time, he called for tax credits to lure jobs back to the United States.”Right now, companies get tax breaks for moving jobs and profits overseas,” Obama said. “Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world.”Obama, facing a tough re-election campaign, for several years has called for steeper taxes on corporations’ foreign profits and closing what he calls tax loopholes that also benefit multinational companies.Most of these ideas have stalled for years in Congress – even some Democrats say they can wait for a complete overhaul of the tax code.A tax lobbyist affiliated with Democrats said real debate over the proposed tax changes would have to wait until after the November 6 presidential and congressional elections.”They would only likely stand a chance in a broader corporate tax reform debate and I just don’t think that tax reform is in the cards,” the lobbyist said.Obama and Republicans both say the tax code needs a major rewrite and lawmakers are laying the groundwork for such a reform, but the process is expected to take years. The 35 percent U.S. corporate rate is among the highest in the world and critics say it harms business competitiveness.Obama is calling for a number of tax policies that could in theory appeal to Republicans, in the name of boosting the flagging economy. For example, he wants to trim tax rates for manufacturers and double a tax deduction for high-tech manufacturing – ideas that might gain some bipartisan backing.But even that is unlikely in the current environment.”Tempted as they may be by more tax cuts, anything that smacks of a deal with Obama, or a victory for Obama, especially one that undercuts their theme – however detached from the reality – that Obama is a tax-increaser, will be reflexively resisted by Republicans in both houses,” said Norm Ornstein, a congressional watcher at the conservative American Enterprise Institute.BUFFETT RULEProbably the biggest tax change Obama outlined is a revamp of what he has called the Buffett rule, named for billionaire investor Warren Buffett, to ensure the wealthy pay what he calls a fair share of taxes. Obama proposed a minimum 30 percent tax on millionaires, and eliminating many tax deductions for them – including for housing, healthcare and childcare.Buffett’s secretary – famous for her boss’s observation that she pays a higher tax rate than he does – sat in the congressional gallery as a guest of the White House to underscore the point.A minimum 30 percent tax rate would be about twice the tax rate paid by Republican presidential candidate Mitt Romney in the past two years, according to filings he released on Tuesday.Lower tax rates enacted under former Republican President George W. Bush are set to expire at the end of this year, setting up a fight over extending them in late 2012.Obama and Democrats want to let the lower rates for the wealthy expire. Obama said given steep budget deficits, Americans face a choice.”Do we want to keep these tax cuts for the wealthiest Americans? Or do we want to keep our investments in everything else?” Obama asked.The top individual income tax rate is now 35 percent, but the superwealthy can enjoy lower rates in some cases if they earn most of their income from investments – as does Romney – which are subject to a 15 percent rate.A version of Obama’s so-called Buffett rule has been promoted by Democrats in Congress as a way to pay for extending the payroll tax cut, but has no chance of passing.Obama had previously proposed limiting deductions for wealthier Americans to a certain percentage of their income, but he went further in Tuesday’s speech to advocate cutting out certain tax breaks completely for millionaires.Even before Obama spoke, Republicans were blasting the speech as a campaign event.”No Bailouts, No Hand-outs, And No Cop-outs,” read one congressional Republican press release.(Editing by Mohammad Zargham)Obama tells Russia’s Medvedev more flexibility after electionSEOUL (Reuters) – President Barack Obama was caught on camera on Monday assuring outgoing Russian President Dmitry Medvedev that he will have “more flexibility” to deal with contentious issues like missile defense after the U.S. presidential election.Obama, during talks in Seoul, urged Moscow to give him “space” until after the November ballot, and Medvedev said he would relay the message to incoming Russian president Vladimir Putin.The unusually frank exchange came as Obama and Medvedev huddled together on the eve of a global nuclear security summit in the South Korean capital, unaware their words were being picked up by microphones as reporters were led into the room.U.S. plans for an anti-missile shield have bedeviled relations between Washington and Moscow despite Obama’s “reset” in ties between the former Cold War foes. Obama’s Republican opponents have accused him of being too open to concessions to Russia on the issue.Republican presidential candidate Mitt Romney seized on Obama’s comment, calling it “alarming and troubling.”"This is no time for our president to be pulling his punches with the American people,” Romney said in a campaign speech in San Diego.As he was leaning toward Medvedev in Seoul, Obama was overheard asking for time – “particularly with missile defense” – until he is in a better position politically to resolve such issues.”I understand your message about space,” replied Medvedev, who will hand over the presidency to Putin in May.”This is my last election … After my election I have more flexibility,” Obama said, expressing confidence that he would win a second term.”I will transmit this information to Vladimir,” said Medvedev, Putin’s prot??g?? and long considered number two in Moscow’s power structure.The exchange, parts of it inaudible, was monitored by a White House pool of television journalists as well as Russian reporters listening live from their press center.The United States and NATO have offered Russia a role in the project to create an anti-ballistic shield which includes participation by Romania, Poland, Turkey and Spain.But Moscow says it fears the system could weaken Russia by gaining the capability to shoot down the nuclear missiles it relies on as a deterrent.It wants a legally binding pledge from the United States that Russia’s nuclear forces would not be targeted by the system and joint control of how it is used.The White House, initially caught off-guard by questions about the leaders’ exchange, later released a statement recommitting to implementing missile defense “which we’ve repeatedly said is not aimed at Russia” but also acknowledging election-year obstacles on the issue.”Since 2012 is an election year in both countries, with an election and leadership transition in Russia and an election in the United States, it is clearly not a year in which we are going to achieve a breakthrough,” White House deputy national security adviser Ben Rhodes said.”Therefore, President Obama and President Medvedev agreed that it was best to instruct our technical experts to do the work of better understanding our respective positions, providing space for continued discussions on missile defense cooperation going forward,” he said.(Reporting By Matt Spetalnick in Seoul and Steve Holland in San Diego; Editing by Robert Birsel and David Brunnstrom)Obama to choose Yellen for top Fed job, markets relievedWASHINGTON (Reuters) – U.S. President Barack Obama will nominate Fed number two Janet Yellen on Wednesday to run the world’s most influential central bank, providing some relief to markets that would expect her to tread carefully in winding down economic stimulus.The nomination will put Yellen on course to be the first woman to lead the institution in its 100-year history. The advocate for aggressive action to stimulate U.S. economic growth through low interest rates and large-scale bond purchases would replace Ben Bernanke, whose second term as Fed chairman expires on January 31.If confirmed by the U.S. Senate, which is expected to endorse her, she would provide continuity with the policies the Fed has established under Bernanke. Analysts say she would move cautiously in reining in policies in place to shore up the world’s largest economy.Expectations that the Fed might start to taper its stimulus program have roiled financial markets since May and the central bank shocked investors in September by maintaining its cash injections of $85 billion a month in full.”Thank God Yellen will be nominated under the current circumstances. You don’t want a change at the central bank right now,” said Dan Fuss, a portfolio manager at Loomis Sayles in Boston. “This Yellen news is one uncertainty lifted from already nervous markets.”Her nomination would come during a political stalemate in Washington that has closed the U.S. government and threatened a U.S. default if lawmakers fail to raise the $16.7 trillion debt ceiling by an October 17 deadline.U.S. stock index futures rose and the dollar slipped on the news of Yellen’s pending nomination. The debt standoff is fueling expectations the Fed may delay any plans to reduce its stimulus for now.If confirmed, she would join the Fed’s honor roll along with such household names as Paul Volcker and Alan Greenspan, predecessors as head of an institution that can influence the course of the world economy.”I believe she’ll be confirmed by a wide margin,” said Senator Charles Schumer, a Democrat from New York.Described as a “good egg” by fellow Fed policymaker Richard Fisher and a “very able person” by Japan’s Chief Cabinet Secretary Yoshihide Suga, her most immediate challenge may be to determine when the Fed should scale back its bond buying.After September’s surprise decision against tapering, many economists now think the Fed will not move until Bernanke has left office.Obama turned to Yellen, 67, after his former economic adviser Lawrence Summers withdrew from consideration in the face of fierce opposition from within the president’s own Democratic Party, raising questions about his chances of congressional confirmation. The contest between Summers and Yellen played out all summer in a public way not usually associated with the selection of the top U.S. central banker.Obama is scheduled to announce his nomination at the White House at 3 p.m. EDT (1900 GMT), a White House official said on Tuesday. Bernanke is expected to attend.RESPECTED ECONOMISTYellen has enjoyed strong support from Democrats. In an unusual move, 20 Senate Democrats signed a letter earlier this year pressing Obama to turn to the former professor from the University of California at Berkeley.Her Republican backing is much softer. Many Republicans worry Fed policy of holding overnight interest rates at zero and buying bonds aggressively to drive other borrowing costs lower could lead to asset bubbles and an unwanted pickup in inflation.”I voted against Vice Chairman Yellen’s original nomination to the Fed in 2010 because of her dovish views on monetary policy,” Senator Bob Corker of Tennessee said in a statement. “We will closely examine her record since that time, but I am not aware of anything that demonstrates her views have changed.”Senator Richard Shelby of Alabama, another Republican, said he has concerns about her “proclivity to print money” and her record as a bank regulator.Still, Yellen is expected to garner enough support to secure the 60 votes needed to overcome any procedural hurdles in the 100-seat Senate. Democrats control the chamber 54-46.A respected economist whose research has taken her deep into theories of monetary policy, Yellen has earned a reputation as one of the Fed officials most worried about unemployment and least concerned about inflation.”With employment so far from its maximum level and with inflation running below the committee’s 2 percent objective, I believe it’s appropriate for progress in the labor market to take center stage in the conduct of monetary policy,” she said in March.Yellen studied economics at Yale University and taught at Berkeley for more than a decade before her first stint as a Fed board governor from 1994 to 1997, a post she left to head President Bill Clinton’s Council of Economic Advisers.She later served as president of the San Francisco Federal Reserve Bank, where her first-hand view of the overheated real estate market helped her see the dangers of the housing bubble earlier than many of her colleagues.As Fed chair, Yellen would arguably be the most powerful woman in the world.She has been central to moving the Fed toward more clarity and precision in its communications, an openness which she sees as the key to an effective monetary policy.Yellen led a panel of officials who rewrote the Fed’s rules on communications and helped convince her colleagues to adopt an explicit inflation target for the first time last year.Her selection bolsters the credibility of promises the Fed has made about the future course of monetary policy that have been a hallmark of its approach ever since it dropped interest rates to zero in 2008.Specifically, she could be expected to abide by, if not strengthen, the Fed’s stated commitment to keep rates steady at least until the U.S. jobless rate hits 6.5 percent, as long as inflation does not threaten to pierce 2.5 percent. The nation’s jobless rate stood at 7.3 percent in August.EASY MONEYYellen, who has long argued that the Fed should tolerate slightly higher inflation if that is the cost of fighting high unemployment, has never dissented on a Fed policy decision.But she also has not shied away from advocating rate rises if she feels the situation calls for it. In 1996, after then-Fed Chairman Alan Greenspan had repeatedly put off raising rates, she and a colleague went to him to argue that the central bank was at risk of courting inflation.Once again, the central bank is facing criticism from some quarters that it is risking inflation. Its controversial bond purchases have put the Fed on track to buy some $3 trillion in mortgage and Treasury debt.The easy money was aimed at digging the U.S. labor market out of the deep hole caused by the 2007-2009 recession.While it pushed U.S. borrowing costs to record lows and sent U.S. stocks to record highs, the loose policy also fueled resentment in some emerging markets, who had to contend with a flood of hot money as investors sought higher returns.Now, the flood gates are reversing.The mere mention by Bernanke in May that the Fed could soon begin to ease up on its monthly purchases sent global financial markets reeling and U.S. borrowing costs sharply higher. Currencies and equities in many emerging markets plunged – underscoring the delicate task Yellen would face.Despite the Fed’s aggressive efforts to prop up the economy, growth has been lackluster and the labor market is still sickly.(Additional reporting by Pedro Nicolaci da Costa, Richard Cowan, and Roberta Rampton in Washington; Ann Saphir in San Francisco; Editing by Tim Dobbyn and Neil Fullick)Obama to name Yellen as next Fed chair on Wednesday: White HouseWASHINGTON (Reuters) – President Barack Obama will nominate Federal Reserve Vice Chairwoman Janet Yellen to be the next head of the U.S. central bank on Wednesday, a White House official said on Tuesday.If confirmed, Yellen would replace Ben Bernanke, whose current term as head of the Fed ends in January. Obama is due to make the announcement at the White House at 3 p.m.(Reporting By Mark Felsenthal and Jeff Mason; Editing by Stacey Joyce)Obama tries to woo business, slams “burdensome” taxWASHINGTON (Reuters) – President Barack Obama stepped up efforts to woo the U.S. business community on Monday, seeking its help to tackle “burdensome” corporate taxes in a speech to a business group that has long been a fierce critic.Obama, on a drive to win over business and independent voters before the 2012 presidential election, also repeated a promise to advance trade deals with Panama and Colombia that would help U.S. companies, but he did not lay out a timetable for getting the pacts passed.”I understand the challenges you face. I understand you are under incredible pressure to cut costs and keep your margins up. I understand the significance of your obligations to your shareholders and the pressures that are created by quarterly reports. I get it,” Obama told the powerful U.S. Chamber of Commerce, which has often opposed the president for what it sees as his “big government” agenda.Members of the Chamber, which the White House has accused of funding ad campaigns against Democrats during last year’s congressional elections, listened politely but were mostly noncommittal in response to the president.White House spokesman Robert Gibbs later told reporters that Obama had not gone seeking applause.”Another barrier government can remove is a burdensome corporate tax code with one of the highest rates in the world,” Obama said.Calling taxes a burden chimes with the view of the corporate world, and is another example of Obama’s efforts to repair relations between the White House and businesses after steep losses by his Democrats in November elections.Chastened by that defeat, Obama has tried to do a better job of communicating with business, dialing down a sometimes acrimonious debate during his first two years in office.’CHANGE IN TONE’”We thought it was a good change in tone,” the Chamber’s president, Thomas Donohue, told Fox News Channel. “He came, he visited, and we look forward to doing things together.”Others in the audience at the Chamber’s headquarters — a stone’s throw from the White House — welcomed Obama’s speech but were still wary of him.”Are they going to follow through or is this just the politics of saying the right thing and it stops there?” said Juliana Zoto Efessiou, who launched a social media venture after her bridal boutique failed during the recession.With one eye on re-election, Obama needs to bring down the unemployment rate of 9 percent and wants companies to hire more. He repeated a call for business to step up investment and hiring to mobilize “nearly $2 trillion sitting on their balance sheets.”"Many of your own economists and salespeople are now forecasting a healthy increase in demand. So I want to encourage you to get in the game,” Obama said.Business had fought Obama’s massive overhaul of Wall Street regulation and reform of the healthcare system, and it resented the president’s sharp rhetoric on executive pay during the height of the financial crisis.The White House, while irritated by the Chamber’s opposition to policies it says will help the economy, has sought to mend relations by employing softer presidential rhetoric and staffing choices that appeal to the business community.Obama picked Bill Daley, formerly of JPMorgan Chase, to be his chief of staff and recently brought on General Electric Co Chief Executive Jeffrey Immelt as his new top outside economic adviser. He also agreed on a tax deal with Republicans last year and has promoted initiatives to boost U.S. exports.While talk of cutting overall corporate tax rates goes down well with some American companies, Obama might upset others by closing loopholes and slashing deductions.Business had hoped Obama would outline a way forward on Monday for stalled trade agreements with Panama and Colombia. But the president made only brief reference to those pacts.”We finalized a trade agreement with South Korea that will support at least 70,000 American jobs. And by the way, it’s a deal that has unprecedented support from business and labor, Democrats and Republicans,” he said.”That’s the kind of deal that I will be looking for as we pursue trade agreements with Panama and Colombia, as we work to bring Russia into the international trading system.”(Additional reporting by Matt Spetalnick, Caren Bohan and Jeff Mason; Editing by Eric Walsh)Obama: U.S. will continue going after al Qaeda-linked groups in AfricaWASHINGTON (Reuters) – President Obama said on Tuesday that the United States will continue to go after al Qaeda-linked groups in Africa, but that is not the same as going to war there.”There is a difference between us going after terrorists who are plotting directly to do damage to the United States and us getting involved in wars,” Obama told a news conference. “Where you’ve got active plots and active networks, we are going to go after them.”U.S. forces last weekend seized a senior al Qaeda figure in Libya, Nazih al-Ragye, and swooped into Somalia in an operation targeting a senior al Shabaab figure who was not caught. The captured militant in Libya, known by the cover name Abu Anas al-Liby, executed plots that killed Americans, and “he will be brought to justice,” Obama said.(Reporting By Susan Cornwell; Editing by Sandra Maler)Obama urges Congress to reopen government, avoid defaultWASHINGTON (Reuters) – President Barack Obama, in a visit to the Federal Emergency Management Agency (FEMA) on Monday to spotlight the loss of government services because of the shutdown, urged Congress to reopen government and raise the debt limit immediately.”My very strong suspicion is there are enough votes there” to pass legislation, he said. “Hold a vote. Call a vote right now. Let’s see what happens.”FEMA had recalled employees who were idled in the shutdown to deal with Tropical Storm Karen but the storm has weakened and Obama said the agency would now send about 100 of them home.The federal government shut down most of its operations and idled all but its most essential workers October 1 after congressional Republicans continued to make defunding or delaying healthcare laws part of spending bills.The country faces the possibility of a debt default if lawmakers do not raise the federal borrowing cap by October 17.Congressional Republicans have similarly insisted on White House concessions for doing so, and Obama has said he would not negotiate over raising the debt limit.Obama said at FEMA that he would be happy to hold talks with congressional Republicans on healthcare or other issues, but not under the threat of shutdown or debt default.A default would have “catastrophic impacts” on the U.S. economy, a White House official told reporters.(Reporting By Steve Holland, Mark Felsenthal and Roberta Rampton; Editing by Sandra Maler)Obama warns Assad U.S. could actWASHINGTON/BEIRUT (Reuters) – U.S. forces could move against Syrian leader Bashar al-Assad, President Barack Obama warned, notably if he deploys his chemical weapons against rebels trying to overthrow him.In some of his strongest language yet on Syria, on a day when U.N. observers pulled out after a fruitless bid for peace and Assad’s forces mounted new attacks, the U.S. leader said Assad faced “enormous consequences” if he crossed a “red line” of even moving unconventional weapons in a threatening manner.Seeking re-election in November, Obama noted that he had refrained “at this point” from ordering U.S. military engagement in Syria. But when he was asked at a White House news conference whether he might deploy forces, for example to secure Syrian chemical and biological weapons, he said his view could change.”We have been very clear to the Assad regime, but also to other players on the ground, that a red line for us is we start seeing a whole bunch of chemical weapons moving around or being utilized,” Obama said. “That would change my calculus.”Faced with a complex and explosive conflict at the heart of the Middle East, and with resolute support for Assad from Iran and from Russia and China at the United Nations, Washington and its Western allies have shown little appetite for more than hands-off help for the rebels, in contrast to their attacks on Libya’s Muammar Gaddafi last year. Obama’s comments, however, raised the prospect of some change, under certain conditions.Syria last month acknowledged for the first time that it had chemical and biological weapons and said it could use them if foreign countries intervened. The threat drew strong warnings from Washington and its allies, although it is not clear how the Syrian armed forces might use such weapons in urban warfare.”We cannot have a situation where chemical or biological weapons are falling into the hands of the wrong people,” Obama told the impromptu news conference on Monday. He acknowledged he was not “absolutely confident” the stockpile was secure.CALL TO QUITCalling again for Assad to step aside to allow a democratic transition but conceding that prospects for a “soft landing” to the conflict were dim, Obama said the weapons worried not only Washington but also its allies in the region, including Israel.Obama has been reluctant to get the United States involved in another war in the Middle East, and refuses to arm rebels fighting a 17-month uprising against Assad, partly out of concern that some of those fighting against the Iranian-backed president are Islamist radicals equally hostile to the West.However, Obama said, Assad should quit: “The international community has sent a clear message that rather than drag his country into civil war, he should move in the direction of a political transition,” Obama said. “But at this point, the likelihood of a soft landing seems pretty distant.”When asked whether he envisioned the possibility of using U.S. forces at least to safeguard Syria’s chemical arsenal, he said: “We’re monitoring that

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